H*3722(Rat #0212, Act #0142 of 1991)  General Bill, By T.M. Burriss
 A Bill to amend Section 37-1-301, Code of Laws of South Carolina, 1976,
 relating to general definitions in regard to the Consumer Protection Code, so
 as to revise certain definitions; to amend Section 37-2-202, as amended,
 relating to additional creditor charges, so as to revise these charges and to
 require certain statements with regard to consumer credit insurance; to amend
 Section 37-2-203, relating to delinquency charges on consumer credit sales, so
 as to revise these charges; to amend Section 37-2-303, relating to notices to
 co-signers and similar parties on consumer credit sales, so as to provide for
 an additional notice to co-signers; to amend Section 37-2-305, relating to
 filing and posting of maximum rate schedules in regard to consumer credit
 sales, so as to provide for rate schedules in regard to variable rates and to
 provide the date by which certain creditor filing fees are due; to amend
 Section 37-2-306, relating to notice of assumption of rights, so as to provide
 that every creditor engaged in making consumer loans pursuant to seller credit
 cards shall make and file certain disclosures; to amend Section 37-3-104,
 relating to the definition of a consumer loan, so as to revise this
 definition; to amend Section 37-3-105, relating to first mortgage real estate
 loans, so as to correct an improper reference; to amend Section 37-3-202, as
 amended, relating to additional lender charges, so as to further provide for
 these charges and to require certain statements with regard to consumer credit
 insurance; to amend Section 37-3-203, relating to delinquency charges on
 certain consumer loans, so as to further provide for these charges; to amend
 Section 37-3-303, relating to notice to co-signers and similar parties on
 certain consumer loans, so as to provide for an additional notice to
 co-signers; to amend Section 37-3-305, as amended, relating to the filing and
 posting of maximum rate schedules by creditors, so as to further provide for
 this filing and posting in regard to variable rates; to amend Section
 37-3-306, relating to notice of assumption rights, so as to provide that every
 creditor making consumer loans pursuant to a lender credit card must make and
 file certain disclosures; to amend Section 37-3-510, relating to restrictions
 on an interest in land as security, so as to exempt certain open-end credit
 agreements from the provisions of this Section; to amend Section 37-4-203,
 relating to filing and approval of creditor rates and charges, and to amend
 Section 34-29-160, relating to borrower insurance under the Consumer Finance
 Law, so as to revise and decrease certain credit life insurance premiums; to
 amend Section 37-6-108, relating to administrative enforcement orders of the
 administrator of the Department of Consumer Affairs, so as to further provide
 for the violations which are subject to actions by the administrator and to
 authorize the administrator to impose certain administrative penalties; to
 amend Section 37-6-113, relating to civil actions by the administrator, so as
 to further provide for the conditions under which a civil penalty may be
 imposed; to amend Section 37-6-117, relating to the administrative
 responsibilities regarding consumer protection of the administrator, so as to
 further provide for these administrative responsibilities; to amend Section
 37-6-203, relating to fees to be paid to the administrator, so as to clarify
 the fee due by persons also engaged in making consumer rental-purchase
 agreements; to amend Section 37-10-102, as amended, relating to attorney's
 fees and other charges on mortgage loans for personal purposes, so as to
 delete certain creditor disclosure statement requirements; to amend the 1976
 Code by adding Section 37-10-107 so as to prohibit a person from maintaining
 an action for relief regarding the borrowing of money under certain specified
 conditions; to amend Section 39-61-100, relating to the authority of the
 administrator under the Motor Club Services Act, so as to authorize the
 administrator to impose penalties; to amend Section 40-39-150, relating to the
 authority of the administrator in regard to pawnbrokers, so as to authorize
 the administrator to issue cease and desist orders; to amend Section 44-79-80,
 relating to the functions and powers of the administrator in regard to the
 Physical Fitness Services Act, so as to further provide for these powers and
 increase the fees for certificates of authority issued by the administrator;
 and to repeal Section 37-6-114 relating to the prohibition against jury trials
 in actions brought by the administrator under the Consumer Protection
 Code.-amended title

   03/26/91  House  Introduced and read first time HJ-5
   03/26/91  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-7
   04/10/91  House  Committee report: Favorable Labor, Commerce and
                     Industry HJ-2
   04/16/91  House  Debate adjourned until Wedneday, April 17, 1991 HJ-12
   04/17/91  House  Amended HJ-41
   04/17/91  House  Read second time HJ-41
   04/18/91  House  Read third time and sent to Senate HJ-11
   04/18/91  Senate Introduced and read first time SJ-7
   04/18/91  Senate Referred to Committee on Banking and Insurance
   05/29/91  Senate Recalled from Committee on Banking and Insurance SJ-47
   05/29/91  Senate Read second time SJ-47
   05/29/91  Senate Ordered to third reading with notice of
                     amendments SJ-47
   05/30/91  Senate Amended SJ-46
   05/30/91  Senate Read third time and returned to House with
                     amendments SJ-65
   06/04/91  House  Concurred in Senate amendment and enrolled HJ-4
   06/06/91         Ratified R 212
   06/12/91         Signed By Governor
   06/12/91         Effective date 07/01/91
   06/12/91         Act No. 142
   06/12/91         See act for exception to or explanation of
                     effective date
   06/26/91         Copies available

AN ACT TO AMEND SECTION 37-1-301, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO GENERAL DEFINITIONS IN REGARD TO THE CONSUMER PROTECTION CODE, SO AS TO REVISE CERTAIN DEFINITIONS; TO AMEND SECTION 37-2-202, AS AMENDED, RELATING TO ADDITIONAL CREDITOR CHARGES, SO AS TO REVISE THESE CHARGES AND TO REQUIRE CERTAIN STATEMENTS WITH REGARD TO CONSUMER CREDIT INSURANCE; TO AMEND SECTION 37-2-203, RELATING TO DELINQUENCY CHARGES ON CONSUMER CREDIT SALES, SO AS TO REVISE THESE CHARGES; TO AMEND SECTION 37-2-303, RELATING TO NOTICES TO CO-SIGNERS AND SIMILAR PARTIES ON CONSUMER CREDIT SALES, SO AS TO PROVIDE FOR AN ADDITIONAL NOTICE TO CO-SIGNERS; TO AMEND SECTION 37-2-305, RELATING TO FILING AND POSTING OF MAXIMUM RATE SCHEDULES IN REGARD TO CONSUMER CREDIT SALES, SO AS TO PROVIDE FOR RATE SCHEDULES IN REGARD TO VARIABLE RATES AND TO PROVIDE THE DATE BY WHICH CERTAIN CREDITOR FILING FEES ARE DUE; TO AMEND SECTION 37-2-306, RELATING TO NOTICE OF ASSUMPTION OF RIGHTS, SO AS TO PROVIDE THAT EVERY CREDITOR ENGAGED IN MAKING CONSUMER LOANS PURSUANT TO SELLER CREDIT CARDS SHALL MAKE AND FILE CERTAIN DISCLOSURES; TO AMEND SECTION 37-3-104, RELATING TO THE DEFINITION OF A CONSUMER LOAN, SO AS TO REVISE THIS DEFINITION; TO AMEND SECTION 37-3-105, RELATING TO FIRST MORTGAGE REAL ESTATE LOANS, SO AS TO CORRECT AN IMPROPER REFERENCE; TO AMEND SECTION 37-3-202, AS AMENDED, RELATING TO ADDITIONAL LENDER CHARGES, SO AS TO FURTHER PROVIDE FOR THESE CHARGES AND TO REQUIRE CERTAIN STATEMENTS WITH REGARD TO CONSUMER CREDIT INSURANCE; TO AMEND SECTION 37-3-203, RELATING TO DELINQUENCY CHARGES ON CERTAIN CONSUMER LOANS, SO AS TO FURTHER PROVIDE FOR THESE CHARGES; TO AMEND SECTION 37-3-303, RELATING TO NOTICE TO CO-SIGNERS AND SIMILAR PARTIES ON CERTAIN CONSUMER LOANS, SO AS TO PROVIDE FOR AN ADDITIONAL NOTICE TO CO-SIGNERS; TO AMEND SECTION 37-3-305, AS AMENDED, RELATING TO THE FILING AND POSTING OF MAXIMUM RATE SCHEDULES BY CREDITORS, SO AS TO FURTHER PROVIDE FOR THIS FILING AND POSTING IN REGARD TO VARIABLE RATES; TO AMEND SECTION 37-3-306, RELATING TO NOTICE OF ASSUMPTION RIGHTS, SO AS TO PROVIDE THAT EVERY CREDITOR MAKING CONSUMER LOANS PURSUANT TO A LENDER CREDIT CARD MUST MAKE AND FILE CERTAIN DISCLOSURES; TO AMEND SECTION 37-3-510, RELATING TO RESTRICTIONS ON AN INTEREST IN LAND AS SECURITY, SO AS TO EXEMPT CERTAIN OPEN-END CREDIT AGREEMENTS FROM THE PROVISIONS OF THIS SECTION; TO AMEND SECTION 37-4-203, RELATING TO THE FILING AND APPROVAL OF CREDITOR RATES AND CHARGES, AND TO AMEND SECTION 34-29-160, RELATING TO BORROWER INSURANCE UNDER THE CONSUMER FINANCE LAW, SO AS TO REVISE AND DECREASE CERTAIN CREDIT LIFE INSURANCE PREMIUMS; TO AMEND SECTION 37-6-108, RELATING TO ADMINISTRATIVE ENFORCEMENT ORDERS OF THE ADMINISTRATOR OF THE DEPARTMENT OF CONSUMER AFFAIRS, SO AS TO FURTHER PROVIDE FOR THE VIOLATIONS WHICH ARE SUBJECT TO ACTIONS BY THE ADMINISTRATOR AND TO AUTHORIZE THE ADMINISTRATOR TO IMPOSE CERTAIN ADMINISTRATIVE PENALTIES; TO AMEND SECTION 37-6-113, RELATING TO CIVIL ACTIONS BY THE ADMINISTRATOR, SO AS TO FURTHER PROVIDE FOR THE CONDITIONS UNDER WHICH A CIVIL PENALTY MAY BE IMPOSED; TO AMEND SECTION 37-6-117, RELATING TO THE ADMINISTRATIVE RESPONSIBILITIES REGARDING CONSUMER PROTECTION OF THE ADMINISTRATOR, SO AS TO FURTHER PROVIDE FOR THESE ADMINISTRATIVE RESPONSIBILITIES; TO AMEND SECTION 37-6-203, RELATING TO FEES TO BE PAID TO THE ADMINISTRATOR, SO AS TO CLARIFY THE FEE DUE BY PERSONS ALSO ENGAGED IN MAKING CONSUMER RENTAL-PURCHASE AGREEMENTS; TO AMEND SECTION 37-10-102, AS AMENDED, RELATING TO ATTORNEY'S FEES AND OTHER CHARGES ON MORTGAGE LOANS FOR PERSONAL PURPOSES, SO AS TO DELETE CERTAIN CREDITOR DISCLOSURE STATEMENT REQUIREMENTS; TO AMEND THE 1976 CODE BY ADDING SECTION 37-10-107 SO AS TO PROHIBIT A PERSON FROM MAINTAINING AN ACTION FOR RELIEF REGARDING THE BORROWING OF MONEY UNDER CERTAIN SPECIFIED CONDITIONS; TO AMEND SECTION 39-61-100, RELATING TO THE AUTHORITY OF THE ADMINISTRATOR UNDER THE MOTOR CLUB SERVICES ACT, SO AS TO AUTHORIZE THE ADMINISTRATOR TO IMPOSE PENALTIES; TO AMEND SECTION 40-39-150, RELATING TO THE AUTHORITY OF THE ADMINISTRATOR IN REGARD TO PAWNBROKERS, SO AS TO AUTHORIZE THE ADMINISTRATOR TO ISSUE CEASE AND DESIST ORDERS; TO AMEND SECTION 44-79-80, RELATING TO THE FUNCTIONS AND POWERS OF THE ADMINISTRATOR IN REGARD TO THE PHYSICAL FITNESS SERVICES ACT, SO AS TO FURTHER PROVIDE FOR THESE POWERS AND INCREASE THE FEES FOR CERTIFICATES OF AUTHORITY ISSUED BY THE ADMINISTRATOR; AND TO REPEAL SECTION 37-6-114 RELATING TO THE PROHIBITION AGAINST JURY TRIALS IN ACTIONS BROUGHT BY THE ADMINISTRATOR UNDER THE CONSUMER PROTECTION CODE.

Be it enacted by the General Assembly of the State of South Carolina:

Definitions revised

SECTION 1. Section 37-1-301(16) of the 1976 Code is amended to read:

"(16) `Lender credit card or similar arrangement' means an open-end credit arrangement or loan agreement, other than a seller credit card, pursuant to which a lender gives a debtor the privilege of using a credit card, letter of credit, or other credit confirmation or identification in transactions out of which debt arises:

(a) by the lender's honoring a draft or similar order for payment of money drawn or accepted by the debtor;

(b) by the lender's payment or agreement to pay the debtor's obligations; or

(c) by the lender's purchase from the obligee of the debtor's obligations.

An open-end credit agreement under which a person can effect an immediate advance by check or other draft qualifies as a lender credit card or similar arrangement."

Creditor charges revised

SECTION 2. Section 37-2-202(1)(c) of the 1976 Code is amended to read:

"(c) with respect to open-end credit pursuant to a seller credit card issued by a creditor which entitles the cardholder to purchase or lease goods or services from at least one hundred persons not related to the card issuer, under an arrangement pursuant to which the debts resulting from the purchases or leases are payable to the card issuer;

(i) annual charges, payable in advance, for the privilege of using the credit card; and

(ii) an over-limit charge not to exceed ten dollars if the balance of the account exceeds the credit limit established pursuant to the agreement between the card issuer and the cardholder plus the lesser of ten percent of the credit limit or one hundred dollars. The over-limit charge authorized by this subitem may not be assessed again against the cardholder unless the account balance has been reduced below the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars and the cardholder's account balance subsequently exceeds the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars."

Consumer credit insurance statement required

SECTION 3. Section 37-2-202(2)(b) of the 1976 Code is amended to read:

"(b) with respect to consumer credit insurance providing life, accident, health, or unemployment coverage, if the insurance coverage is not required by the creditor, and this fact is clearly and conspicuously disclosed in writing to the consumer, and if in order to obtain the insurance in connection with the extension of credit, the consumer gives specific, dated, and separately signed affirmative written indication of his desire to do so after written disclosure to him of the cost of it with a statement similar to the following appearing in caps, underlined, or disclosed in another prominent manner with the consumer signature required by this section: CONSUMER CREDIT INSURANCE IS NOT REQUIRED TO OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL COST; and"

Delinquency charges revised

SECTION 4. Section 37-2-203 of the 1976 Code is amended to read:

"Section 37-2-203. (1) With respect to a consumer credit sale including an open-end consumer credit sale pursuant to a seller credit card, and any refinancings or consolidations of all such credit sales, the parties may contract for a delinquency charge on any installment not paid in full within ten days after its due date, as originally scheduled or as deferred, in an amount not exceeding five dollars, which is not more than five percent of the unpaid amount of the installment.

(2) Notwithstanding subsection (1) the seller may contract for and receive a minimum delinquency charge not to exceed forty percent of five dollars as adjusted pursuant to Section 37-1-109. The seller may contract for such a minimum charge even though the charge exceeds five percent of the unpaid amount of the installment.

(3) A statement in the agreement between the creditor and the debtor to the effect that the creditor may charge the maximum delinquency charge (or late charge) authorized by law entitles the creditor to impose a delinquency charge in the dollar amount specified in subsections (1) and (2) as adjusted pursuant to Section 37-1-109 at the time the delinquency charge is imposed, subject to the five percent of the unpaid amount of the installment limitation, if applicable.

(4) A delinquency charge under this section may be collected only once on an installment however long it remains in default. No delinquency charge may be collected with respect to a deferred installment unless the installment is not paid in full within ten days after its deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter.

(5) A delinquency charge under this section may not be collected on an installment paid in full within ten days after its scheduled or deferred installment due date even though an earlier maturing installment or a delinquency or deferral charge on an earlier installment has not been paid in full. For purposes of this subsection, a payment is deemed to have been applied first to any installment due in the computational period (Section 37-2-204(1)(a)) in which it is received and then to delinquent installments and charges."

Additional notice to co-signers

SECTION 5. Section 37-2-303 of the 1976 Code is amended by adding:

"(5) A notice to co-signer which complies with the Federal Trade Commission's Trade Regulation Rule on Credit Practices (16 C.F.R. Section 444) complies with this section provided that the notice does not indicate that the creditor may collect any amount or engage in any activity which would be illegal under South Carolina law, and the notice contains the following information signed and dated by the co-signer.

I have received a copy of this notice.

."

(Date) (Signed)

Designation of rate schedules; dates of filings

SECTION 6. Section 37-2-305 of the 1976 Code is amended to read:

"Section 37-2-305. (1) Every creditor (Section 37-1-301(13)), intending to impose a credit service charge in excess of eighteen percent per annum other than an assignee of a credit obligation, making consumer credit sales (Section 37-2-104) in this State on or before the effective date of this section, and in the case of a creditor not making consumer credit sales in this State on that date, on or before the date the creditor begins to make such credit sales in this State, shall file with the Department of Consumer Affairs and, except as otherwise provided in this section, post in one conspicuous place in every place of business in this State, if any, in which offers to make consumer credit sales are extended, a maximum rate schedule meeting the requirements set forth in subsections (2), (3), and (4) of this section.

(a) A creditor that has seller credit cards or similar arrangements (Section 37-1-301(26)) is not required to post a copy of the required rate schedule in any place of business which is authorized to honor such transactions; provided that the creditor shall include a conspicuous statement of the maximum rate it intends to charge for these transactions in the initial disclosure statement required to be provided the debtor by the Federal Truth-In-Lending Act and notifies the debtor of any change in the maximum rate on or before the effective date of the change.

(b) [Blank]

(2) The rate schedule required to be filed and posted by subsection (1) must contain a list of the maximum rate of credit service charge (Section 37-2-109) stated as an annual percentage rate, determined in accordance with the Federal Truth-In-Lending Act and Federal Reserve Board Regulation Z, that the creditor intends to charge for consumer credit transactions in each of the following categories of credit:

(a) unsecured credit sales;

(b) secured credit sales other than those secured by real estate;

(c) credit sales secured by real estate;

(d) open-end (revolving) credit;

(e) all other.

If a variable rate is applicable to one or more categories or subcategories, the rate schedule must designate the rate as a variable rate and disclose the index for calculating changes in the rate and the cap or other limitation, if any, on any increases or decreases in the rate.

The creditor may include as many subcategories as it chooses under each of the specified categories, and may, at its option, include a series of rates for different dollar amounts and maturities. A creditor may omit one or more of the categories from the rate schedule if the creditor does not make consumer credit transactions falling within the omitted categories.

(3) The rate schedule that is filed by the creditor must be reproduced in at least fourteen-point type for posting as required by subsection (1). The terms `Credit Service Charge' and `Annual Percentage Rate' will be printed in larger size type than the other terms in the posted rate schedule. The following statement must be included in the posted rate schedule: `Consumers: All creditors making consumer credit sales in South Carolina are required by law to post a schedule showing the maximum rate of CREDIT SERVICE CHARGES expressed as the FINANCE CHARGE stated as ANNUAL PERCENTAGE RATES that the creditor intends to charge for various types of consumer credit transactions. The purpose of this requirement is to assist you in comparing the maximum rates that creditors charge, thereby furthering your understanding of the terms of consumer credit transactions and helping you to avoid the uninformed use of credit. NOTE: Creditors are prohibited only from granting consumer credit at rates higher than those specified above. A creditor may be willing to grant you credit at rates that are lower than those specified, depending on the amount, terms, collateral, and your creditworthiness.'

(4) A rate schedule filed and posted as required by this section is effective until changed in accordance with this subsection. A creditor wishing to change any of the maximum rates shown on a schedule previously filed and posted or to add or delete the prescribed categories or subcategories shall file with the Department of Consumer Affairs, in duplicate, together with the required fee specified in subsection (6) and post as required by subsection (1) a revised schedule of maximum rates. The revised schedule must be certified and returned to the creditor if properly filed. The revised rate schedule is effective for all consumer credit extended after the close of business on the day the certified schedule is received by the creditor or seven days after the date of submission postmark, whichever is earlier. The posting or changes in connection with seller credit cards and similar arrangements shall be made in accordance with subsection (1).

(5) A creditor has no obligation to print the maximum rate schedule in any public advertisement that mentions rates charged by that creditor.

(6) The Department of Consumer Affairs shall maintain a file for each creditor containing the original and all revised rate schedules by the creditor. A certified copy of each filing showing the date and time that it was received must be sent to the creditor making the filing at the time of its receipt. A fee of twenty dollars for each rate schedule filed by a creditor is payable to the Department of Consumer Affairs for its services in maintaining the rate schedule files and providing one certified copy of each rate filing to the creditor. Additional certified copies of a filing must be provided at a charge of four dollars for each copy.

(7) The Commission on Consumer Affairs shall promulgate a regulation pursuant to subsection (2) of Section 37-6-506 establishing the format of the rate schedules prescribed by this section.

(8) Every creditor shall file at least one maximum rate schedule and pay at least one twenty-dollar filing fee during each state fiscal year disclosing that creditor's existing maximum rates. This filing and fee required of each creditor is due annually before the thirty-first day of January of each year. If this filing does not change any maximum rates previously filed, the creditor is not required to alter posted maximum rates. If any creditor has not filed a maximum rate schedule with the Department of Consumer Affairs by the thirty-first day of January of the year in which it is due, then on this date the filing is no longer effective and the maximum credit service charge that the creditor may impose on any credit extended after that date may not exceed eighteen percent a year until such time as the creditor files a revised maximum rate schedule that complies with this section."

Disclosures required

SECTION 7. Section 37-2-306 of the 1976 Code is amended to read:

"Section 37-2-306. (A) Every creditor engaged in this State in making consumer credit sales pursuant to a seller credit card shall:

(1) file on or before January thirty-first of each year with the Department of Consumer Affairs for every seller card plan it offers to South Carolina residents the disclosures required for credit and charge card applications and solicitations by the Federal Truth-in-Lending Act, Federal Reserve Board Regulation Z, Section 226.5a(b), 12 C.F.R. Section 226.5a(b), and any amendments or replacements. The disclosures required by this section must be based on fees and charges and other terms in effect as of December thirty-first of the prior year. The required disclosures may be filed by providing one or more actual applications or solicitations used by the creditor which contain the required disclosures or by providing the disclosures on one or more of the Model Forms in Appendix G of Federal Reserve Board Regulation Z. The annual filing fee for each creditor is twenty dollars, payable at the time the disclosures are filed regardless of the number of filings; and

(2) file with the Department of Consumer Affairs current figures on the disclosures required by item (1) of this section within thirty days after receiving a written request for this information from the administrator. No filing fee may be imposed for this information request.

(B) Failure to file the disclosures required by this section and any errors in these disclosures does not affect the validity of any transaction or the maximum rates or charges in any transaction made by the creditor, but the creditor is subject to the administrative remedies in Part 1 of Chapter 6."

Consumer loan definition revised

SECTION 8. Section 37-3-104 of the 1976 Code is amended to read:

"Section 37-3-104. Except as provided in Section 37-3-105, `consumer loan' is a loan made by a person regularly engaged in the business of making loans in which:

(a) the debtor is a person other than an organization;

(b) the debt is incurred primarily for a personal, family, or household purpose;

(c) either the debt is payable in installments or a loan finance charge is made; and

(d) either the principal does not exceed twenty-five thousand dollars or the debt is secured by an interest in land."

Reference changed

SECTION 9. Section 37-3-105(2)(c) is amended to read:

"(c) Whenever the primary purpose of the credit extended is not to enable the debtor to buy or build a residence on residential real property, the administrative powers in Part 1 of Article 6.

If an origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge substantially exceeds the usual and customary charge for a particular type of loan, the creditor is subject to the provisions of Part 1, Chapter 6 of Title 37, notwithstanding that the origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge is properly disclosed as part of the finance charge for purposes of complying with the Federal Truth-in-Lending Act or part or all of the origination charge, prepaid finance charge, prepaid points charge, service, or other prepaid charges are rebatable or refundable upon prepayment or acceleration of the obligation. For the purpose of this paragraph, a creditor is not subject to any liability if the loan finance charge and other fees and charges imposed by the creditor and the collection practices followed in administering or enforcing the loan are usual and customary for the particular type of loan. A charge, collection practice, or administrative procedure that is authorized or required by any state or federal statute or regulation relating to mortgage loans; or in any official manual setting forth the procedures for real estate mortgages issued by any governmental or quasi-governmental organization that purchases, insures, or guarantees such loans, including without limitation, manuals issued by the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Corporation, or by any organization that regularly insures mortgages and is authorized to conduct such business in this State, is deemed to be usual and customary."

Authorized lender charges; consumer credit insurance statements required

SECTION 10. Section 37-3-202 of the 1976 Code, as last amended by Act 164 of 1989, is further amended to read:

"(1) In addition to the loan finance charge permitted by this chapter a lender may contract for and receive the following additional charges in connection with a consumer loan:

(a) official fees and taxes;

(b) charges for insurance as described in subsection (2);

(c) with respect to open-end credit pursuant to a lender credit card issued by a creditor which entitles the cardholder to purchase or lease goods or services from at least one hundred persons not related to the card issuer, under an arrangement pursuant to which the debts resulting from the purchases or leases are payable to the card issuer;

(i) annual charges, payable in advance, for the privilege of using the credit card; and

(ii) an over-limit charge not to exceed ten dollars if the balance of the account exceeds the credit limit established pursuant to the agreement between the card issuer and the cardholder plus the lesser of ten percent of the credit limit of one hundred dollars. The over-limit charge authorized by this subitem may not be assessed again against the cardholder unless the account balance has been reduced below the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars, and the cardholder's account balance subsequently exceeds the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars; and

(d) with respect to a loan secured by an interest in land, the following `closing costs', if they are bona fide, reasonable in amount, and not for the purpose of circumvention or evasion of this title:

(i) fees or premiums for title examination, abstract of title, title insurance, surveys, or similar purposes;

(ii) fees for preparation of a deed, settlement statement, or other documents, if not paid to the creditor or a person related to the creditor;

(iii) escrows for future payments of taxes, including assessments for improvements, insurance, and water, sewer, and land rents;

(iv) fees for notarizing deeds and other documents, if not paid to the creditor or a person related to the creditor; and

(v) fees for appraising the real estate that is collateral for the loan, if not paid to the creditor or a person related to the creditor;

(e) charges for other benefits, including insurance, conferred on the debtor, if the benefits are of value to him and if the charges are reasonable in relation to the benefits, are of a type which is not for credit, and are authorized as permissible additional charges by rule adopted by the administrator;

(f) fees and charges paid to persons registered as mortgage loan brokers pursuant to Chapter 58 of Title 40.

(2) An additional charge may be made for insurance written in connection with the loan, other than insurance protecting the lender against the debtor's default or other credit loss with respect to:

(a) insurance against loss of or damage to property, or against liability, if the lender furnishes a clear and specific statement in writing to the debtor, setting forth the cost of the insurance if obtained from or through the lender, and stating that the debtor may choose the person through whom the insurance is to be obtained;

(b) consumer credit insurance providing life, accident and health, or unemployment insurance coverage, if the insurance coverage is not required by the lender, and this fact is clearly and conspicuously disclosed in writing to the debtor, and if, in order to obtain the insurance in connection with the loan, the debtor gives specific, dated, and separately signed affirmative written indication of his desire to do so after written disclosure to him of the cost thereof with a statement similar to the following appearing in caps, underlined, or disclosed in another prominent manner with the consumer signature required by this section: CONSUMER CREDIT INSURANCE IS NOT REQUIRED TO OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL COST; and

(c) vendor's single interest insurance, but only:

(i) to the extent that the insurer has no right of subrogation against the debtor;

(ii) to the extent that the insurance does not duplicate the coverage of other insurance under which loss is payable to the creditor as his interest may appear, against loss of or damage to property for which a separate charge is made to the debtor pursuant to paragraph (a); and

(iii) if a clear, conspicuous, and specific statement in writing is furnished by the creditor to the debtor setting forth the cost of the insurance if obtained from or through the creditor and stating that the debtor may choose the person through whom the insurance is to be obtained;

(3) With respect to an assumption of an existing obligation, the lender may, in addition to the other authorized charges, charge an assumption fee not exceeding the lesser of four hundred dollars or one percent of the unpaid balance of the debt at the time the assumption transaction is consummated whenever the primary collateral securing the credit is real estate or a residential manufactured home and not exceeding the lesser of fifty dollars or one percent of the unpaid balance of the debt at the time the assumption transaction is consummated whenever the primary collateral securing the credit is personal property other than a residential manufactured home."

Delinquency charges revised

SECTION 11. Section 37-3-203 of the 1976 Code is amended to read:

"Section 37-3-203. (1) With respect to a consumer loan including an open-end consumer loan pursuant to a lender credit card or similar arrangement, and any refinancings or consolidations of all such consumer loans, the parties may contract for a delinquency charge on any installment not paid in full within ten days after its due date, as originally scheduled or as deferred, in an amount, not exceeding five dollars which is not more than five percent of the unpaid amount of the installment.

(2) Notwithstanding subsection (1) the lender may contract for and receive a minimum delinquency charge not to exceed forty percent of five dollars as adjusted pursuant to Section 37-1-109. The lender may contract for such a minimum charge even though the charge exceeds five percent of the unpaid amount of the installment.

(3) A statement in the agreement between the lender and the debtor to the effect that the lender may charge the maximum delinquency charge (or late charge) authorized by law entitles the creditor to impose a delinquency charge in the dollar amount specified in subsections (1) and (2) as adjusted pursuant to Section 37-1-109 at the time the delinquency charge is imposed, subject to the five percent of the unpaid amount of the installment limitation, if applicable.

(4) A delinquency charge under this section may be collected only once on an installment however long it remains in default. No delinquency charge may be collected with respect to a deferred installment unless the installment is not paid in full within ten days after its deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter.

(5) A delinquency charge under this section may not be collected on an installment paid in full within ten days after its scheduled or deferred installment due date even though an earlier maturing installment or a delinquency or deferral charge on an earlier installment has not been paid in full. For purposes of this subsection, a payment is deemed to have been applied first to any installment due in the computational period [Section 37-3-204(1)(a)] in which it is received and then to delinquent installments and charges.

(6) If two installments or parts thereof of a precomputed consumer loan are in default for ten days or more, the lender may elect to convert the loan from a precomputed loan to one in which the loan finance charge is based on unpaid balances. In this event, he shall make a rebate pursuant to the provisions on rebate upon prepayment (Section 37-3-210) as if the date of prepayment were one day before the maturity date of a delinquent installment, and thereafter may make a loan finance charge as authorized by the provisions on loan finance charge for consumer loans by lenders not supervised lenders [Section 37-3-201(1)] or finance charge for consumer loans by supervised lenders [Section 37-3-201(2)], whichever is appropriate. The amount of the rebate must not be reduced by the amount of any permitted minimum charge (Section 37-3-210). If the creditor proceeds under this subsection, any delinquency or deferral charges made with respect to installments due on or after the maturity date of the first delinquent installment must be rebated, and no further delinquency or deferral charges may be made."

Additional notice to co-signers

SECTION 12. Section 37-3-303 of the 1976 Code is amended by adding:

"(5) A notice to co-signer which complies with the Federal Commission's Trade Regulation Rule on Credit Practices (16 C.F.R. Section 444) or which complies with a regulation regarding co-signer notices promulgated by any federal agency pursuant to Section 18(f) of the Federal Trade Commission Act, 15 U.S.C. Section 57a(f) (Section 202(a) of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, Public Law 93-63F) likewise complies with this section, provided that the notice does not indicate that the creditor may collect any amount or engage in any activity which would be illegal under South Carolina law and the notice contains the following information signed and dated by the co-signer:

I have received a copy of this notice.

(Date) (Signed)."

Designation of rate schedules

SECTION 13. (A) Section 37-3-305(1) of the 1976 Code is amended to read:

"(1) Every creditor [Section 37-1-301(13)], other than an assignee of a credit obligation, making supervised or restricted consumer loans (Section 37-3-104) in this State shall on or before the effective date of this section, and in case of a creditor not making supervised consumer loans in this State on that date, on or before the date the creditor begins to make such loans in this State, file with the Department of Consumer Affairs and, except as otherwise provided in this section, post in one conspicuous place in every place of business, if any, in this State in which offers to make consumer loans are extended, a certified maximum rate schedule meeting the requirements set forth in subsections (2), (3), and (4) of this section.

A creditor that has issued lender credit cards or similar arrangements [Section 37-1-301(16)] is not required to post a copy of the required rate schedule in any place of business which is authorized to honor such transactions except its central and branch offices other than a branch office that is a free-standing automatic teller machine; provided, that the creditor shall include a conspicuous statement of the maximum rate it intends to charge for these transactions in the initial disclosure statement required to be provided the debtor by the Federal Truth-In-Lending Act and notifies the debtor of any change in the maximum rate on or before the effective date of the change."

(B) Section 37-3-305(2) of the 1976 Code is amended to read:

"(2) The rate schedule required to be filed and posted by subsection (1) must contain a list of the maximum rate of loan finance charge (Section 37-3-109) stated as an annual percentage rate, determined in accordance with the Federal Truth-In-Lending Act and Federal Reserve Board Regulation Z, that the creditor intends to charge for consumer credit transactions in each of the following categories of credit:

(a) unsecured personal loans;

(b) secured personal loans other than those secured by real estate;

(c) real estate mortgage loans;

(d) open-end (revolving) credit;

(e) all other.

The creditor may include as many subcategories as it chooses under each of the specified categories, and may, at its option, include a series of rates for different dollar amounts and maturities. A creditor may omit one or more of the categories from the rate schedule if the creditor does not make consumer credit transactions falling within the omitted categories.

If a variable rate is applicable to one or more categories or subcategories, the rate schedule must designate the rate as a variable rate and disclose the index for calculating changes in the rate and the cap or other limitation, if any, on any increases or decreases in the rate."

Disclosures required

SECTION 14. Section 37-3-306 of the 1976 Code is amended to read:

"Section 37-3-306. (1) Every creditor engaged in this State in making consumer loans pursuant to a lender credit card or similar arrangement shall:

(a) file on or before January thirty-first of each year with the Department of Consumer Affairs for every lender card plan it offers to South Carolina residents the disclosures required for credit and charge card applications and solicitations by the Federal Truth-In-Lending Act, Federal Reserve Board Regulation Z, Section 226.5a(b), 12 C.F.R. Section 226.5a(b), and any amendments or replacements thereto. The disclosures required by this section must be based on fees and charges and other terms in effect as of December thirty-first of the prior year. The required disclosures may be filed by providing one or more actual applications or solicitations used by the creditor which contain the required disclosures on one or more of the model forms in Appendix G of Federal Reserve Board Regulation Z. The annual filing fee for each creditor is twenty dollars, payable at the time the disclosures are filed regardless of the number of filings; and

(b) file with the Department of Consumer Affairs current figures on the disclosures required by item (a) within thirty days after receiving a written request for this information from the administrator. No filing fee may be imposed for this information request.

(2) Failure to file the disclosures required by this section and any errors in these disclosures does not affect the validity of any transaction or the maximum rates or charges in any transaction made by the creditor but the creditor is subject to the administrative remedies in Part 1 of Chapter 6."

Exemptions from section

SECTION 15. Section 37-3-510 of the 1976 Code is amended to read:

"Section 37-3-510. (1) With respect to a supervised loan in which the principal is one thousand dollars or less, a lender may not contract for an interest in land as security. A security interest taken in violation of this section is void.

(2) An open-end credit agreement under which the credit limit is a minimum of five thousand dollars is exempt from this section even though one or more advances made pursuant to the agreement are less than one thousand dollars."

Credit life insurance premiums revised

SECTION 16. (A) Section 37-4-203(5) of the 1976 Code is amended to read:

"(5) Credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness is scheduled to continue, subject to a minimum charge of two dollars:

Decreasing

Balance Level

Balance Individual $ .75 $ 1.50 Joint Insurance $ 1.25 $ 2.50"

(B) The last paragraph of Section 34-29-160 of the 1976 Code is amended to read:

"Credit life insurance premiums for each one hundred dollars of indebtedness are considered reasonable and may be charged if they are not greater than the amounts given in the following table times the number of years, or fraction of a year, that the indebtedness is scheduled to continue, subject to a minimum charge of two dollars:

Decreasing

Balance Level

Balance Individual $ .75 $ 1.50 Joint Insurance $ 1.25 $ 2.50"

Violations subject to action by administrator and administrative penalties authorized

SECTION 17. (A) Section 37-6-108(6) of the 1976 Code is amended to read:

"(6) For purposes of this section and Sections 37-6-117 and 37-6-118, a violation of the South Carolina Unfair Trade Practices Act which arises out of the production, promotion, or sale of consumer goods, services, or interests in land is deemed to be a violation of this title subject to action by the administrator."

(B) Section 37-6-108 of the 1976 Code is amended by adding:

"(7) Unless otherwise specifically provided by law, the following administrative penalties, in the discretion of the administrator, may be levied against persons found to have engaged in violations of this title pursuant to subsection (1) of this section:

(a) If the violator is found to have violated repeatedly and intentionally any provision of this title, the violator must be fined in an amount not to exceed two thousand five hundred dollars and not to exceed ten thousand dollars for any transaction or occurrence or set of transactions or occurrences which violated multiple provisions of this title.

(b) If the violator is shown to have violated any previous lawful order of the administrator or court of competent jurisdiction, the violator, in the discretion of the administrator, may be fined in an amount not to exceed five thousand dollars for each violation.

(c) The penalties in items (a) and (b) of this subsection are in addition to any other penalties provided by law or any other remedies provided by law.

(8) The administrator may make findings and issue cease and desist orders regarding unconscionable conduct or unconscionable debt collection pursuant to this section, but he may not award damage, treble damage, or attorney's fee remedies to affected customers in these hearings."

Conditions for civil penalties

SECTION 18. Section 37-6-113(2) of the 1976 Code is amended to read:

"(2) The administrator may bring a civil action against a creditor or a person acting in his behalf to recover a civil penalty of no more than five thousand dollars for repeatedly and intentionally violating this title. A civil penalty pursuant to this subsection may not be imposed for a violation of this title occurring more than two years before the action is brought."

Repeal

SECTION 19. Section 37-6-114 of the 1976 Code is repealed.

Administrative responsibilities revised

SECTION 20. Section 37-6-117(d) of the 1976 Code is amended to read:

"(d) Cooperate with and assist the South Carolina and United States Attorney General and all state and local agencies performing consumer protection functions in carrying out their legal enforcement responsibilities for the protection of consumers;".

Individual actions authorized when

SECTION 21. Section 37-6-117(i) of the 1976 Code is amended to read:

"(i) With the approval of the Commission on Consumer Affairs, bring an individual action for a consumer who might have a cause of action for damages resulting from the use of or employment by another person of an unfair or deceptive method, act, or practice, as provided in Section 39-5-140, when he considers such action is necessary to protect the consumer's interest, the actual damages sought are two thousand five hundred dollars or less, and either the individual has written evidence that two attorneys licensed to practice law in this State have reviewed the case and have declined to represent the individual in pursuing the cause of action, or an attorney licensed to practice law in this State, after reviewing the facts of the case, in writing has requested that the administrator bring an action on behalf of the consumer under this section.

The provisions of this subsection do not apply if consumer-industry appeals, arbitration or mediation panels or boards, whose decisions are binding on the participating business, are available in this State for the product or service concerned, provided such business complies with the decision of the panel or board."

Fees for locations

SECTION 22. Section 37-6-203 of the 1976 Code is amended to read:

"Section 37-6-203. A person required to file notification shall pay on or before January thirty-first of each year to the administrator an annual fee of ninety dollars for that year, for each address in this State listed in the notification; provided, that the fee for any one person must be not less than ninety dollars; provided, further, that a person who does not extend credit pursuant to written contracts and a person whose annual gross volume of business does not exceed one hundred fifty thousand dollars is exempt from any fee and from the notification requirements of Section 37-6-202. A person engaged in making consumer credit sales or consumer leases who is also engaged in making consumer rental-purchase agreements is only required to pay one ninety dollar fee for each location."

Certain creditor disclosure requirements deleted

SECTION 23. Section 37-10-102(c) of the 1976 Code is deleted.

Certain legal or equitable actions prohibited

SECTION 24. The 1976 Code is amended by adding:

"Section 37-10-107. (1) No person may maintain an action for legal or equitable relief or a defense based upon a failure to perform an alleged promise, undertaking, accepted offer, commitment, or agreement:

(a) to lend or borrow money;

(b) to defer or forbear in the repayment of money; or

(c) to renew, modify, amend, or cancel a loan of money or any provision with respect to a loan of money, involving in any such case a principal amount in excess of fifty thousand dollars, unless the party seeking to maintain the action or defense has received a writing from the party to be charged containing the material terms and conditions of the promise, undertaking, accepted offer, commitment, or agreement and the party to be charged, or its duly authorized agent, has signed the writing.

(2) Failure to comply with subsection (1) precludes an action or defense based on any of the following legal or equitable theories:

(a) an implied agreement based on course of dealing or performance or on a fiduciary relationship;

(b) promissory or equitable estoppel;

(c) part performance, except to the extent that the part performance may be explained only by reference to the alleged promise, undertaking, accepted offer, commitment, or agreement; or

(d) negligent misrepresentation.

(3) Subsections (1) and (2) do not apply to:

(a) a loan of money used primarily for personal, family, or household purposes;

(b) an agreement or change in the terms of an agreement relating to a line of consumer credit, lender credit card, or similar arrangement;

(c) an overdraft on a demand deposit or other bank account; or

(d) promissory notes, real estate mortgages, security agreements, guaranty and surety agreements, and letters of credit.

(4) In the event of a conflict between this section and any other provision of law of this State relating to the requirement of a signed writing, the provisions of the other provision of law shall control."

Administrative penalties authorized

SECTION 25. Section 39-61-100 of the 1976 Code is amended to read:

"Section 39-61-100. (1) The administrator may order the club to cease and desist, or may revoke, suspend, or refuse to continue the certificate of authority of a club, whenever, after a hearing and for cause shown, he determines that the club:

(a) has violated or failed to comply with any provisions of this chapter or regulations promulgated under authority of this chapter;

(b) has obtained a certificate of authority through wilful misrepresentation or fraud;

(c) has engaged in fraudulent or deceptive practices;

(d) has wilfully, orally or in writing, misrepresented the terms, benefits, privileges, and provisions of any service contract issued or to be issued by it or any other club;

(e) is unable to meet its obligations as determined by generally accepted accounting principles;

(f) has, after notice to the club of an alleged occurrence of any of items (a) through (e) of this section, refused without just cause to submit relevant information to the administrator with respect to the motor club services within this State.

(2) In lieu of revocation, suspension, or refusal to continue a certificate of authority for a violation or violations of items (a) through (f) of subsection (1) of this section, the administrator in his discretion may assess an administrative penalty of not less than one hundred nor more than one thousand dollars for each violation. No accumulation of these penalties may exceed five thousand dollars for matters commenced in any calendar year. These penalties may be assessed in connection with orders to cease and desist."

Cease and desist orders authorized

SECTION 26. Section 40-39-150 of the 1976 Code, as added by Act 491 of 1988, is amended to read:

"Section 40-39-150. (A) Upon the finding that an action of a pawnbroker is in violation of this chapter, or of a law or regulation of this State or of the federal government or an agency of the state or federal government, the administrator, after reasonable notice to the pawnbroker and an opportunity for the pawnbroker to be heard, shall order the pawnbroker to cease and desist from the action.

(B) The Administrator of the Department of Consumer Affairs may impose also administrative fines of up to seven hundred fifty dollars for each offense upon persons violating any of the provisions of this chapter up to a maximum of fifteen thousand dollars for the same set of transactions or occurrences. Each violation constitutes a separate offense. In addition, any person violating the provisions of Sections 40-39-20 and 40-39-30 is guilty of a misdemeanor and, upon conviction, must be punished by a fine not exceeding one thousand dollars or by imprisonment for a term not exceeding sixty days, or both. The administrator may revoke or suspend a pawnbroker's certificate of authority in addition to the penalties enumerated in this section."

Fees revised

SECTION 27. Section 44-79-80(5) of the 1976 Code is amended to read:

"(5) No certificate of authority may be issued by the administrator until the center pays an initial certificate of authority fee of fifty dollars an outlet. Certificates of authority may be renewed upon payment of an annual renewal fee of fifty dollars an outlet on or before December thirty-first."

Authority of administrator revised

SECTION 28. (A) Section 44-79-80(8) of the 1976 Code is amended to read:

"(8) The administrator may order the center to cease and desist, or may revoke, suspend, or refuse to continue the certificate of authority of a center, whenever, after a hearing and for causes shown, he determines that the center has violated or failed to comply with any provisions of this chapter or regulations promulgated under the authority of this chapter, or if after notice and opportunity for a hearing, it is shown that:

(a) any document or declaration required by subsection (4), items (a) through (g) were false or misleading; or

(b) by clear and convincing evidence the center or its agents, officers, or employees have engaged in false, fraudulent, or deceptive conduct in its dealings with customers;".

(B) Section 44-79-80 of the 1976 Code is amended by adding:

"(9) In lieu of revocation, suspension, or refusal to continue a certificate of authority of a center, the administrator in his discretion may assess an administrative penalty for a violation of subsection (4) or (8) of this section not to exceed five hundred dollars for each violation, not to exceed five thousand dollars for matters commenced in any calendar year. These penalties may be assessed in connection with orders to cease and desist."

Time effective

SECTION 29. This act takes effect July 1, 1991, except the individual and joint insurance decreasing and level balance charges reduced in Section 37-4-203(5) of the 1976 Code and the last paragraph of Section 34-29-160 of the 1976 Code as contained in Section 16, and the provisions of Section 37-2-202(2)(b) of the 1976 Code as contained in Section 3, and the provisions of Section 37-3-202(2)(b) of the 1976 Code as contained in Section 10 take effect January 1, 1993.

Approved the 12th day of June, 1991.